UNIVERSITY OF DAR ES SALAAM

DAR ES SALAAM UNIVERSITY COLLEGE OF

EDUCATION

DS 112: THEORIES OF SOCIAL DEVELOPMENT

 LECTURE 1: INTRODUCTION
• What is Development Studies?
• It is a branch of social sciences that include a
broad range of courses/disciplines that address
various development issues: planning, implemen-
tation and consequences of socio-economic and
political changes.
• Development Studies is an interdisciplinary and
multidisciplinary field of inquiry.
• It combines more than one academic disciplines;
drawing insights from various disciplines that can
guide/shape development
• As an interdisciplinary and multidisciplinary dis-
cipline, it draws insights from a number of disci-
plines:
• Sociology, Political Science, History, philosophy,
Psychology, Economics, Anthropology, Geogra-
phy, Demography, Science, Education etc
• It examines various Development Issues (using
insights from a range of disciplines): poverty, in-
equalities, social, political, economic, cultural,
environmental, demographic, science etc
 What is Development?
• Various definitions exist.
• Water Rodney (1972) sees development as a
many sided concepts. According to him devel-
opment “implies increased skill and capacity,
greater freedom, creativity, self discipline, re-
sponsibility and material well being” (Page 9)
• Giovanni Reyes (2001): Development is a socio-
economic and political condition within a nation,
in which the authentic needs of its population are
satisfied by the rational and sustainable use of
natural resources and systems

• Development “include the specification that social

groups have access to organizations, basic services
(water, health, education, housing, nutrition and
above all their cultures and traditions are re-
spected…”
• Development is a process through which an indi-
vidual or a nation/society improves the economic,
political and social wellbeing of its people.

• Development is also defined as improvement in the

condition of life of human beings in all aspects of
life i.e. politically, socially and economically.

• Development is a desirable change-a change to the

better
• Generally development is a multidimensional
or many sided concept embracing improve-
ments or progressive change (denominators)
in all the aspects/spheres of life of human be-
ings:
• The dimensions/aspects/sphere of life of hu-
man beings include:
 Social
 Political
 Economic aspects
 The Multidimensional Nature of De-
velopment
• Three dimensions/perspectives/aspects used
when defining development
• Economic perspective/dimension: This considers
indicators such as economic development: these
include GNP, GDP, Per capital income, increase of
investment, improvement of infrastructure, bank-
ing, technology
• Political Perspective/dimension: Indicators in-
clude availability of democracy, availability of
free and fair election, low level of corruption
• Social perspectives/dimensions: Indicators in-
clude: availability of social services, increase of
life expectancy (Developed countries 80 years,
Developing countries 45).

• Others include low mortality rate (infant, child

and maternal mortality rates, lack of diseases

• Development is also defined/viewed as a state

(condition) and as a process
 Development as state/condition
• Development as a state or condition refers to the
valued social, economic, political and technological
condition/state that a society attains or seeks to at-
tain.
• Social condition-increased facilities and improved
provision of quality services in social sectors e.g.
water, education, health, education, life expectancy.
• Economic condition-improved production, income,
infrastructure (roads, railways, power), availability
of goods for mass consumption.
• Political condition-include emergence and thriv-
ing of democratic governance, rule of law, free
and fair election, respect of human rights and
freedom (speech, movement, religion).

• Technological condition-include increased high

technological facilities and services such as in-
ternet, social media, mobile phones etc.
 Development as a process
• Development as a process refers to the process of
change in social, economic and political structures/
systems of the society implemented to achieve val-
ued development goals
• Changes in social structure-social relations, gender
relationship e.g. Gender mainstreaming
• Changes in economic structure: involve factors and
processes of economic production i.e. changes from
agricultural economy to industrial economy,
changes in trade, investment, fiscal policies, state
controlled to market economy, privatization
process, hand hoe to mechanization
• Changes in political system-include a change
from single party political system to multiparty
system, from centralized to decentralized gov-
ernance system, from undemocratic to demo-
cratic political system etc.
• Changes in technology: from non or low ap-
plication of technology to high technological
application in the production, governance
(e.g. adoption of e-governance), social com-
munication (increased use of modern com-
munication technologies e.g. internet, social
media, analogy to digital etc
• Generally, development as a condition is a prod-
uct of development process.
• A change process (a positive change or a change
to the better) brings about the valued condition
that people attain or seek to attain. Examples
• Free education delivery seeks to attain education
for all-improved literacy rate, increased skill.
• Universal health coverage-improved health con-
dition (reduced mortality, improved life ex-
pectance)
 What is a Theory?
• The concept Theory is defined differently:

• A Theory refers to the suppositions, principles,

concepts, assumptions speculations or system of
ideas intended to explain or understand some-
thing.

• Thus a theory of development entails a set of

ideas, principles, suppositions, concepts, as-
sumptions or speculations that are used to un-
derstand and interpret development.
• Generally, Theories of Development entail a col-
lection of suppositions, explanations, principles
from a variety of social science disciplines and
approaches concerning how desirable changes in
society (development) can best be achieved.
• Different theories with different propositions or
explanations explain and describe development
process-how development occurs or why it fails
to occur?
• Thus different explanations to the process of de-
velopment. (GROUP A, B, D and C covered)
 LECTURE 2: Groups of Theories of De-
velopment
• Two main groups
• Marxist theory of Development (Political Economy theory of
Karl Marx and Neo-Marxist theories of Development

• Bourgeoisie/Modernization theory of Development

(A number of modernization theories of social development
exist. Among others include Stages of Economic Growth, Vi-
cious Circle of Poverty)
 Marxist Theory of Development
• Karl Marx’s theory is known as Political Economy
Theory of Development.
• Karl Marx lived in England during the time of Indus-
trial revolution in Britain and Europe (19th C).

• In this period there was mass poverty: majority

were too poor to sustain their lives.

• During this period there exist two antagonistic

classes i.e. the class of have not (proletariats) and
the rich class (Bourgeoisie)
• The theory of Karl Marx seeks to examine the
causes of changes or development in a society (his-
torical evolution of societies).

• Karl Marx uses Historical Materialism or Materialist

Conception of History as a methodological ap-
proach for studying and analyzing changes or de-
velopment in a society.
• Historical materialism focuses on societies and their
development over time.
• Historical materialism looks for the causes of devel-
opment and changes in human societies (it analyses
the underlying causes of changes)

• The theory argues that the history of a society is ba-

sically the history of development of productive
forces and class struggle or class conflicts.

• It argues that the evolution of a society or changes

in a society are determined by development of pro-
ductive forces and class struggle/conflicts
• Class struggles and class conflicts (contradictions)
are the driving forces of changes and development
in a society.

• Class struggle is necessary in producing positive

changes (Development) in societies.

• He viewed class struggle and class conflict in a pos-

itive manner, not in a negative one
• According to Karl Marx, Human history includes five
main stages of human development:
• 1. Primitive Communalism
• 2. Feudalism
• 3. Capitalism
• 4. Socialism
• 5. Communism
NB: The driving forces for changes of societies from
one stage to the other are development of produc-
tive forces and class struggle
 1. Primitive Communalism
• The initial/first stage of human development
• Hunting and gathering societies
• Productive forces were very poor i.e. stones and
sticks
• Collective ownership of the means of produc-
tion/communal ownership
• Relations of production were collective
• No antagonistic class/no exploitation of man by
man
 2. Feudalism
• Some improvements in productive forces
• Private ownership of means of production
emerged (land ownership)
• Two antagonistic classes emerged (serfs and land
lords)
• Serfs were exploited by land lords through rent
i.e. labor rent, money rent and rent in kind
• Exploitation led to class struggle and class con-
flict which eventually led to the change of the
system or mode
 3.Capitalism
• Two antagonistic classes.
• The class of bourgeoisie and Proletariats.
• The Bourgeoisie/capitalist owned and controlled
the major means of production.
• The Bourgeoisie paid the Proletariats/working
class a little/low wage that could not sustain their
lives and long working hours.
• This led to class conflict/contradictions between
the two classes leading to the Proletariat revolu-
tion to establish socialism.
 4. Socialism
• A higher stage of society development.
• The class contradictions in the capitalist system led
to Proletariat Revolution which culminated into
the establishment of socialism
• It is a socio-economic system based on social
ownership of the major means of production with
distribution based on one’s contribution
• No antagonistic classes (social ownership)
• The major means of production are controlled by
the working class/Proletariats
 5. Communism
• This is the highest stage of society development-
stateless and classless society

• As the productive forces advances, Marx though of

transformation of socialism to Communism

• Common ownership of all properties and each per-

son contributes and receives according to his ability
• No exploitation due to common ownership
 Criticism of Marx’s Theory
It is criticized by the bourgeoisie as follows:
1. The argument that a society cannot develop
without exploitation and class conflicts
2. The belief on working class as an instrument of
leading real revolution in society-real revolution
should be a result of the collaboration between
workers and peasants, not workers alone
3. He believed on class conflict as the driver for
change, how can socialism change to commu-
nism without class struggle
 Relevance of Marx’s Theory
• Class struggle/conflicts are seen in our societies
where workers are paid lower wages and we see
strikes and boycotts for better wages.

• Improvement in productive forces is key for

changes or development in society.
 LECTURE 3: Bourgeoisie/Modernization Theo-
ries
• These theories emerged after the WWII to answer
the following questions:
 Why Developed Countries are more developed
than Developing Countries?
 Why a wide gap (in Dev.) among these countries
and what contributes to this difference?
• Modernization describes and explain the processes
of social transformation from traditional societies
to modern societies, following the path used by
Developed Countries (from 15th C to date)
• Modernization theorists look at development as
modernization (modernity)
• To develop is to modernize the values, beliefs,
norms, traditions and the practices of life
• Modernization is the transformation of tradi-
tional, agricultural societies to a modern, urban,
industrial society
• The transformation is associated with changes in
values, beliefs, norms, traditions, practices etc
• It simply means the adoption of modern ways of
life, values and practices-urbanization
 The Main Arguments/Underlying Assump-
tions
1. Modernization is a phased, stage by stage, linear
development process
2. All societies have to go/pass through the same
path followed by Western Europe, USA, Japan
3. Modernization can only take place in a capitalist
system/framework, not socialism/communism
4. For modernization to take place, traditional
structures and values must give way to modern
ones (are values universal?)
 The modern structures and values, among others
include:
More achievement oriented structures and val-
ues, more receptive to change, more technologi-
cally oriented,

More participatory decision making, political par-

ties, parliaments etc

Industrialization, urbanization, money economy

etc
• Modernization theories argument for the underde-
velopment of Third World Countries (TWCs) are
based on the following explanation:

 The failure of economic take-off in TWCs i.e. lack of

necessary and sufficient conditions to expedite capi-
tal formation, productivity, savings and investment
in key sectors in specific countries

 They focus on internal/domestic factors for the

failed economic growth and underdevelopment of
TWCs.
• With regards to this group of theories (Moderniza-
tion) our focus will be on the two Modernization
theories namely:
1.Prof. Rostow’s Stages of Economic
Growth
2.Prof Nurkes’s Vicious Circle of
Poverty
 Rostow’s Stages of Economic Growth
• Rostow’s theory uses historical approach to de-
scribe and explain the process of modernization in
Western countries
• Rostow’s theory was the ideological reply/reaction
to the communist manifesto of Karl Marx and
Fredrick Engels
• It shows that developing countries did not need
socialism to develop
• The theory also rejected allegations that devel-
oped countries and global imperialism are respon-
sible for underdevelopment in TWCs
• The theory make use of the equivalence of an air-
plane which moves along the runway until it
reaches the take-off stage before soaring into the
sky.

• The theory view development as a process that fol-

lows a linear path from low stage to the highest
stage, while passing through five stages of economic
development.

• Each stage should be fulfilled before the next

The Stages of Economic Growth by
Rostow
1. The Traditional stage
2. The Transition orPre-Condition for Take-off
stage
3. The Take-off stage
4. The Drive to Maturity
5.The age of High Mass Consumption
 1. Traditional Society Stage
• Limited range of production and backward
technology
• The social structure is hierarchical where fam-
ily and clan connections play dominant role
(extended families and clan alliances)
• A false understanding of environmental capa-
bilities (limited knowledge on Env.)
• Agricultural sector is dominant with more
than 75% of the pop is engaged in agriculture
as the main source of income (peasants &
state)
• High fertility rates
• High mortality rates i.e. especially of infants
between ages 0-5 years
• Low level of technology
• Little social mobility or no movement at all
• Availability of diseases and nefarious local be-
liefs
• Generally, this stage is pre-scientific, low pro-
ductivity, undifferentiated social roles, feudal
land ownership
2. Transitional Stage/Pre condition for
Take-off
• All the pre-condition for sustained economic
development are created
• This include a number of radical changes to in-
clude: improvement of transportation and
telecommunication to enlarge market size,
technological revolution in agriculture, mod-
ern methods of production in industries and
agriculture.
• Expansion of both domestic and international
trade
• National investment being raised to 5% of the na-
tional income to sustain economic growth.

• Willingness of people to change their values e.g.

borrowing/lending money for investments.

• High level of entrepreneurship associated with in-

creases in creativity and innovativeness.

• Level of science and technology being raised in or-

der to bring innovation
 3. Take-off stage
• This stage is defined as an industrial revolution pe-
riod with radical changes in the methods of produc-
tion in industries
• The rise of new industries and new industrial tech-
niques (timber, textiles, rail road industries)
• The requirement for the Take-off are: a rise in the
national investment from 5% to over 10%
• Development of substantial manufacturing sectors
with a high growth rate
• The existence of political, social and institutional
framework which can foster economic development
• Strong political organization- high level of
democracy
• Agricultural sector is mechanized
• Higher level of science and technology
• Generally, high level of investment, substantial
manufacturing, appropriate institutions, more
integration in the world economy
 4. Drive to maturity
• This stage is defined by Rostow as period when a
society has applied a range of modern technol-
ogy to use its resources and develop
• Widespread application of technology in its full
range
• New leading sectors to be created
• A rate of national investment well over 10% of
national GNP
• Old industries replaced by the new ones
• The economy being able to absorb unexpected
internal and external shocks
5. The Age of High Mass consumption
• Characterized by rural to urban migration
• Greater tendency towards mass consumption
durable consumer goods
• The society is too matured in all aspects of
human life: politically, socially, economically
• Transportation and communication are more
complex
• Highest level of science and technology
• Good allocation of resources e.g. the specialist
ones are taking authority in organizing society
 Relevance of Rostow’s Theory
• The critical role of improvement of technology
(productive forces) for improved productivity.
• The critical importance of saving and investment in
key economic sector.
• The importance of transforming the traditional val-
ues, beliefs, traditions into modern ones.
• The critical role of diversified economy
• The critical role of industrialization.
• The significance of external assistance for economic
development.
 Criticism of Rostow’s Theory
• The Western social value system have own specific
historical context and could not be transplanted
everywhere and anywhere.
• The Rostow’s theory is explicit about economic
growth, not development per se
• There are more than one paths to development
with different end points
• Development is not linear, but zigzag
• Development could take place outside the capital-
ist system
• It is impossible to identify the stages of develop-
ment in societies in the evolution of the developed
countries (overlaps).
• The argument that whether a country develop or
not is entirely internal affairs of a country.
• There are countries that have satisfied the pre-con-
dition for take off but have not taken.
• Many TWCs have received assistance yet they have
not taken off.
 Lecture 4: Vicious Circle of Poverty
• Proposed by Prof. Ragnar Nurkes
• It is a theory of underdevelopment
• The main arguments of a theory are:

 If a society is poor, that society will continue to be

poor and poor forever.

 A society is poor because it is poor and it will con-

tinue to be poor.
 The Implicit Assumptions of Nurkes
• Savings depends on the level of income. Income is a
measure of development.
• The level of investment determine the level of de-
velopment.
• Underdeveloped countries have low levels of in-
come, savings and investment.
• They need foreign capital (big push).
• Developing countries are caught in two intercon-
nected vicious circle of poverty; demand side and
supply side of the vicious circle of poverty.
 Supply side of the Vicious circle of
Poverty
• There is the small capacity to save due to low level
of real income.
• The low real income is a reflection of low produc-
tivity.

• Low productivity is largely due to lack of capital.

• Lack of capital is a result of the small capacity to

save; the circle is complete.
 Demand Side of the Vicious Circle
of Poverty
• There is Low investment due to the small buying
power of the people
• Small buying power of the people is due to small
real income
• Low income is due to low productivity
• Low productivity is a result of the small amount
of capital used in production
• Low capital in turn may be caused by small in-
ducement to invest: the circle is complete.
 Summary of the two Circles of
Poverty
• Supply side: Low productivity-Low income-Low sav-
ing-Low capital formation-low productivity-the cir-
cle is complete)
• Demand side: Low capital-Low productivity-Low in-
come-Small purchasing power-Low investment (low
capital-the circle is complete.

• NB: The main reason of vicious circle of poverty

(underdevelopment) is the lack of capital forma-
tion.
Supply Side of the circle
Demand Side of the Circle
 The solution: How to get out of the vi-
cious circle of poverty
• TWCs need to receive external push (big push
from outside) to get out of the vicious circle of
poverty

• The external push/assistance should be in the

form of grants, loans form IMF, World Bank and
other donors (have these helped?)
 Limitations of Nurkes’s Theory
• It fails to tell us the root causes of underdevel-
opment of TWCs.

 It tells us the outcomes of underdevelopment-

which could be the result of external forces e.g.
the rise of capitalism in Europe (exploitation).

• It fails to show how did European countries man-

aged to break the circle of poverty.
 Neo-Marxist Theories
• Neo-Marxist are people who wrote after Karl Marx.

• They borrowed some arguments of Marx to pro-

pound their views/theories.

• The Neo-Marxist theories are grouped into two

groups:

1)The Dependency Theory

2)The World Capitalist Theory
 Dependency Theory
• Dependency theory was developed during the
1970s and early 1980s.

• It was developed as a reaction to modernization

theory’s failure to answer some basic questions.

• The theorists include: Raul Prebisch, Falleto,

Theotonio Dos Santos, Enrique Cardozo, Samir
Amin, Andre Gunder Frank, Walter Rodney, Rui
Mauro Marinin etc
• They oppose the argument that the underdevelop-
ment of TWCs is due to internal factors.
• Underdevelopment of TWCs can be understood in
connection with the integration of TWCs in the
global capitalist system.
• The integration or incorporation of TWCs in the
world capitalist economy created dependency, due
to exploitative relationship.
• This became the source of underdeveloped coun-
tries.
• They blame external factors for the development
of TWCs.
They blame the exploitative relationship that
created dependence of the TWCs on the Devel-
oped countries.
The internal factors for underdevelopment in
TWCs are irrelevant.
They are mere symptoms and consequences of
exploitative relationship that created depen-
dency in TWCs.
• Exploitative relationship can be traced back during
15th C,
 During the time of mercantilism
 Slave trade
 Colonialism
 Neo-colonialism (globalization) (MNCs/TNCs, WB,
IMF, SAPs).
• These created dependent economies in TWCs.
• Producing what we don’t consume and consuming
what we don’t produce=dependency and underde-
velopment.
63
• Generally, dependency theory is a theory of un-
derdevelopment.
• It describes and explain the underdevelopment
of the TWCs
• Its main focus is on the external factors that hin-
der/impair indigenous development and that
created and continue to create dependency.

• It therefore focus on the forms of economic de-

pendence, unjust and exploitative relationship
between developed countries and the TWCs.
 Solution Offered by Dependency
• Total disengagement from a dependent and ex-
ploitative relations with the capitalist system e.g.
China in the 1950s,1960s and 1970s, Cuba.

• Adoption of socialism (many African countries

adopted socialism (is it a viable solution?)

• Promotion of South-South Cooperation.

• Promotion of regional cooperation or economic

corporation or integration to widen market
 Shortcomings or Irrelevance
• The theory fails to provide exhaustive empirical
evidence to support its conclusion (is underde-
velopment of TWCs entirely due to external fac-
tors?).
• Total disengagement from global capitalist sys-
tem is strategically not feasible and desirable.
(the forces of globalization)
• There is a possibility of socio-economic devel-
opment within a capitalist system e.g. Taiwan,
Korea and Hong Kong that used export strategy.
• The theory considers ties with the developed
countries as being only detrimental to devel-
oping countries, while in actual fact the ties/
relationship can be an opportunity:
 A means of transferring technology,
 Attracting FDI
 Tourism
 LECTURE 5: World System Theory
• The theory was proposed by Emmanuel Wallen-
stein.
• There is no such a thing as national economy but
global economy.
• There are elements that operate in the global
economy which leads to development (DCs) and
underdevelopment of TWCs.
• These are international trade (WTO, tariffs), Interna-
tional financial system, transfer of Technology, Mili-
tary links etc.
 The Main Assumptions/Ideas of the WST
 The world is capitalist in nature and consist of a
single market/global system.
 The global system is structured in such a way
that the core is at the center, the semi-periph-
ery in the middle and the periphery outside.
 The core countries exploit both the semi-pe-
riphery and periphery countries.
 The Periphery countries are exploited by both
the core and the semi-periphery countries,
hence underdevelopment of periphery.
 The Arguments/Assumptions of WST
• The world (global system) is divided into; the core,
semi periphery and periphery countries.
• The core (Developed countries)
1)They are highly industrialized, dominate others
2)Highest level of science and technology
3)High level of productivity and income
4)Have skilled labor and are democratic
5)Strong state institutions
NB: They exhibit all the features of developed coun-
tries- have the highest level of socio-economic and
political development, strong institutions
 Semi-Periphery countries
1) The intermediary/midway countries that can fall
back to the periphery or can leap to the core
2) They use capitalism as their mode of production
3) Have dynamic economies with rigid but negotiable
wages (growing economies)
4) They promote industrialization (the NICs)

NB : Examples include South Africa, Brazil, Argentina

and the NICs such as Taiwan, Singapore, Hong
Kong etc
 The Periphery Countries
1) Comprises the least developed countries
2) They have the lowest level of industrial and eco-
nomic development
3) Have the lowest level of S&T
4) Have peasantry economies/agricultural economy
5) Have the highest level of poverty
6) Are vertically integrated with the core countries
NB: Examples are SSA, Asian countries (except the
NICs) and Latin American countries
 The core exploit semi-periphery and periphery
countries through various mechanisms.
These include:
 International trade (setting price at the world mar-
ket for raw materials and finished goods), tariffs

 Through SAPs (privatization, deregulation of the

market, devaluation of currency, free trade, FDI
etc
 The Solutions to Exploitation
• Adoption of socialism as a solution to underde-
velopment and exploitation of the periphery
countries. (is this viable? Does it provide the bet-
ter solution?).

• Zonal economic integration: EAC, ECOWAS,

SADC, PTA, COMESA.

• Cut off relationship with the core countries (De-

velopment partners)-is this feasible under this
era of globalization?
 Critique of Dependency and the WST
by Modernization Theorists
• Dependency and the WST blames external fac-
tors as the causes of underdevelopment and ig-
nore the various internal factors within their
countries.
These include: corruption, misallocation of re-
sources, poor and badly implemented policies,
tribalism, civil wars, regionalism, low level of
technology, bad cultural practices (superstition,
killing of albino, widow inheritances, forced mar-
riage, early marriages, FGM etc
 Nationalist Theories, Socialism and
Self Reliance
• Theorists are such as Julius Nyerere, Kwame
Nkrumah, Sekou Toure, Leopold Sedar Senghor
• They seek to promote development through:
 Humanitarian principles of joint production, egali-
tarian distribution
 Universal obligation to work to bring about devel-
opment.
 Using Insights from real African traditions and val-
ues in promoting development e.g. African democ-
racy, culture etc.
 Self reliance-African socialism will oorbe con-
structed largely on internal resources and with as-
sistance mainly from friendly socialist countries.

 Unity and solidarity of all Africans as a tool to pro-

mote African Dev: Nkrumah and Sekou Toure Pre-
ferred immediate continental unity (USA) but Ny-
erere; stage by stage integration.

 One party democracy was relevant for the emerg-

ing countries-unity and consensus.
 Theoretical Assumptions
• Advocates African socialism-It will promote people
centered Development and equal distribution of
wealth, rather than capitalism
• State intervention in the economy- Active involve-
ment of the state in the economy will facilitate egal-
itarianism in distribution.
• Nationalization-African socialism to socialize the
means of production and distribution-to avoid ex-
ploitation.
• Collective work-people should live and work to-
gether to promote people centered Development.
 Proposed Policy Interventions
• Provision of free basic social services i.e. educa-
tion, health, water and infrastructures.
• To promote close South-South cooperation
• To institutionalize popular participation in deci-
sion-making by every citizen (in villages).
• To promote mass education for ideological and
cultural emancipation of the people.
• Centralized decision making process
• Single party democracy
• Self reliance
 Theoretical and Policy Shortcomings
(the Weaknesses)
• Over-centralization of political power in state
and political party organs-bureaucracy in state.

• Weak state bureaucracy to plan and supervise

implementation (centralization).

• Poor management of the state supported firms

and parastatals-inefficiencies in the public sector.
• Peasants productivity in the Ujamaa villages re-
mained low.
 Neo-Liberal Theory of Social Development
• The theory emerged in the 1980s.
• Dominant theorists include Margaret Thatcher,
Ronald Reagan, the World Bank and IMF.
• The theory explains and describes the underdevel-
opment of TWCs and provide solutions.
• Their argument is that, TWCs are underdeveloped
because of the following reasons:
 Too much public sector involvement in the economy
This will restrict freedom of individualism and inno-
vation due to lack of competition.
It will lead to corruption and unnecessary bureau-
cracies and inefficiency in the economy
 The big size of the public sector (too much civil ser-
vants in the public sector (a burden).
This leads to unnecessary cost to the government
 Too many rules and regulations to follow when in-
vesting or doing business
 Too much taxation (cumbersome tax system). This
disrupts investments and discourage investors).
NB: All these distort the economy and make it inflexi-
ble and unresponsive economy, hence underdevel-
opment.
 Solutions offered by the Theory
• According to Neo-Liberalism Theory, Development
will best be achieved through:
 Individualism-liberating individual entrepreneurial
freedom (private property rights).
 Promoting laissez faire (economic liberalism) or free
market economy (minimalist state/public sector).
 Allowing Privatization-selling public owned compa-
nies and allow private investment.
 Deregulation-Governments to reduce or remove
unnecessary restrictions for investment/trade.
It means government to create favorable env.
 Reforming the taxation system by cutting taxes to
encourage investment (Reduce taxes).
 Devaluation of Currencies to encourage investment
(make it cheap for investment).
 Retrench workers in the public sector to reduce the
size of the public sector.
 Political liberalism-allow multiparty political system
Reducing public sector expenditures/spending by
removing subsidies) to promote the role of private
sector.
Cost sharing-user charges and fee (in education)
• Some countries adopted willingly the Neo-liberal
prescriptions but in many countries, the Neo-liberal
principles were imposed through the SAPs of 1980s.
• Generally:
• The Neo-Liberal thinkers advocate a set of economic
policies and institutions that will promote FREE
MARKET and PRIVATE SECTOR as engine of eco-
nomic growth and Development.
• They argue TWCs to discourage those that hinder
free trade and the flourishing of the Private sector
for these countries to promote development.
• The role of the state to be minimal-confined to
security, economic infrastructure and promotion
of the rule of law, enforcement of property
rights and contracts.
• State would tax business and invest in society re-
sulting in trickle down impact on the society at
large.
• Liberal democracy would ensure direct and indi-
rect popular participation in the political sphere
and leaders accountability to voters.
 Proposed Policy Interventions
• Open up the national economy to free trade
and investment
• Promote a minimalist but efficient state
• Reform the tax systems
• Privatize state enterprises
• Reduce public expenditure of social service
• Liberalize politics (multipartism)
• Change perceptions of the public good to indi-
vidualism and individual responsibility
• Individual freedom and right to private property
 Criticism of Neo-Liberalism Theory
• Economic growth hardly trickles down globally
and nationally: few billionaires and over 3 billion
living on poverty.
• Poverty levels increases as real wages go down
and tax benefits for TNCs skyrocket
• Unemployment increases with widespread use of
labor serving technologies
• 86% of world resources consumed by the world’s
20 %
• Vulnerable groups suffer most with radical reduc-
tions in safety nets
 References

1. Katie Willis (2005). Theories and Practice of Devel-

opment. London, Routledge.
http://www.academia.edu/1039472/Theories_and_
practice_of_Development_Studies.PDF
2. Walter Rodney (1972). How Europe Underdevel-
oped Africa.
https://docs.google.com/file/d/0BzmzYUZFyTg4QTJ
ESHZrVTlqTDg/edit